WeHo loosens chokehold on struggling cannabis shops

West Hollywood City Council approved revisions to the rules governing cannabis licensing at their meeting Monday night which will provide some financial relief to local cannabis enterprises. 

The new ordinance’s primary aim is to revise waitlist rule provisions in the city’s cannabis licensing framework. It specifically puts a temporary halt on the deadlines which deals with the application process, scoring, and review of cannabis licenses. This action is intended to facilitate extended outreach and consensus-building among cannabis businesses and stakeholders regarding further modifications to the ordinance.

This ordinance emerges from a background of extensive consultations held with local cannabis businesses, stakeholders, including the West Hollywood Chamber of Commerce. These discussions were initiated following requests from various local stakeholders for further ordinance changes to assist cannabis businesses in their successful establishment and operation.

Key elements of the ordinance include:

• The pause in processing amendments related to cannabis licensing categories and variance requests for license transfers from January 22, 2024, to July 1, 2024.
• Authorization for the City Manager or a designated representative to negotiate a marketing and outreach support agreement with Emerald Village West Hollywood, capped at $50,000.
• Allocation of $50,000 from the city’s unallocated General Fund Reserves to the Business Retention & Attraction account for supporting local cannabis businesses.

Additionally, the ordinance introduces a temporary tax rebate of 1 percent for all operational cannabis businesses in West Hollywood. This rebate, effective for six months, is designed to provide financial relief to these businesses, particularly in the context of economic challenges post-pandemic.

Several cannabis business owners and industry figures came to speak during Public Comment, requesting a greater rebate amount among other changes to the provision. Council declined to alter staff’s recommendation. 

“Our goal is to ensure that the cannabis industry in West Hollywood is fully prepared for its next chapter,” Councilmember Chelsea Byers said. “We’re in a position where I also understand that there have been extensive discussions across Los Angeles County about the use of tax dollars generated by the cannabis industry. That is definitely a conversation best left to voters. However, I am supportive of the rebate that our staff has proposed. This represents a pause, but it’s essential for accelerating progress afterward. Therefore, a period of 60 days seems more than sufficient. By then, it will effectively be eight months of time that we’ve allowed for these businesses to get back on track.”

The city’s initial cannabis licensing ordinance, set up post-2018, was among the first in California. It established a complex, merit-based licensing process. Since then, the city has revised its ordinance several times to adapt to the growing and changing cannabis industry. In December, the City Council was updated on the status of cannabis businesses and the progress of applicants in the process of opening. Subsequent to this update, the council directed staff to engage with cannabis businesses and stakeholders to reach consensus on numerous proposed ordinance amendments. Meetings and discussions with various stakeholders revealed the need for more time to negotiate and reach an agreement satisfactory to all involved parties. The ordinance, therefore, includes provisions to streamline the waitlist process for cannabis license applicants, providing a clearer and more expedient path to obtaining a license. It requires waitlist applicants to submit a “Letter of Intent” within 60 days of notification of eligibility for a license and to secure a business license within 12 months. This is a change from the previous 18-month period allowed, with additional provisions for situations where an applicant does not respond to the waitlist notification.

The ordinance also freezes the operational deadline for applicants who have received conditional approval but are not yet operational. This freeze is intended to provide these applicants additional time to commence operations without penalty.

Council also OK’d a $50,000 agreement with Emerald Village West Hollywood to bolster the visibility and viability of cannabis businesses in the city.

City Hall is exploring the formation of a cannabis assessment district. This initiative, akin to the long-standing travel and tourism assessment district for hotels in West Hollywood, would establish an ongoing revenue source to market local cannabis businesses.

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